TaxTMI 
TaxTMI 
2023 (11) TMI 8
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....e related persons and the sale was not on Principle to Principle basis therefore the valuation of 'Heat Exchangers' was required to be determined under CAS-4 in terms of the provisions of Section 4(1)(a) of the Central Excise Act, 1944 read with Central Excise Valuation Rules.2000. In other words, the 'Transaction value' under Section 4(1)(a) is not applicable in their case." 2.1 Appellant was engaged in clearing Heat Exchanges to Original Equipment Manufacturers (OEMs) vendors who used these exchangers in manufacture of Samsung Brand Air Conditioners. These Air Conditioners were subsequently purchased by the appellant. Appellant claimed that OEMs were dependent manufacturer and therefore duty on the Heat exchanges cleared to OEMs was paid on mutually agreed transaction value, the duty was paid by the appellant on this transaction value which was based on standard cost of production plus 10% profit. Subsequently, on insistence of the revenue, appellant paid differential duty when actual cost of production became available. 2.2 Revenue issued a show cause notice dated 26.06.2008 alleging that the appellant an OEM were related person. Accordingly, the value of the Heat ....
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....leged short payment of Service tax credit." 2.3 This show cause notice was adjudicated by the Additional Commissioner Central Excise Noida, holding as follows:- ORDER (i) The Demand of duty of Rs.1,21,11,757/- (Rupees One Crore Twenty One lacs Eleven Thousand Seven Hundred Fifty Seven only) in respect of clearences of Heat Exchangers is hereby confirmed under Section 11 A (1) of the Central Excise Act, 1944. Since the amount is already deposited, the same stands appropriated. (ii) I Interest of Rs.9,95,669/- (Rupees Nine Lacs Ninety Five Thousand Six Hundred Sixty Nine only) leviable under Section 11 AB of the Central Excise Act, 1944 is also confirmed. Since it has already been deposited; the same stands appropriated. (iii) I hereby Impose penalty of Rs. 1,21,11,757/- (Rupees One Crore Twenty One lacs Eleven Thousand Seven Hundred Fifty Seven only) on M/s Samsung India Electronics Pvt. Ltd. Noida under Rule 25 read with Section 11 AC of the Act. (iv) The demands for recovery of Service Tax credit adding up to Rs 2,31,91,807/- (Rupees Two Crores Thirty One Lacs Ninety One Thousand Eight Hundreds Seven only) related to as such clearance of i....
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....not soled goods intentionally for a long period at a price which was lower than cost of production plus 10%. Therefore, decision of Hon'ble Supreme Court in the case of Fiat would not be applicable in the present case what could be applicable in the present case is a decision of Kolkata Bench in the case of T & T Metals Pvt. Ltd. Vs Commissioner 2021 (376) ELT 545 (Tri.-Kolkata). • Extended period of limitation is not invocable and the entire demand is barred by limitation. As the appellant from beginning has informed the revenue about the nature of transaction so no suppression of fact can be alleged the view adopted by the appellant was in accordance with the various judicial pronouncements and there cannot be any malafide intention to evade duty. All the facts were in the knowledge of revenue and merely that appellant was not depositing duty as per interpretation of the Department, as alleged in the show cause notice, extended period could not have been invoked. Reliance can be also placed from the following decisions- • Anand Nishikawa Co. Ltd. v. CCE, 2005 (188) ELT 149 (SC) • Pushpam Pharmaceuticals v. CCE, 1995 (78) ELT 401 (SC); ....
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....that Rule 2(b) of Valuation Rules defines normal transaction value as the value at which greatest quantity of goods were sold. Rule 8 was applicable when goods were not sold but used captively. Since the goods are sold, hence Rule 8 would not apply. It has also been submitted that OEM vendors were not related. 4.3 I find that the contentions put forth by the appellant above are not sustainable. I observe that the OEM vendors are so associated with the business of M/s Samsung India Electronics that it is hard to conclude that they were not having interest in the business of each other. The plea that the goods are sold on the basis of purchase orders on which Sales Tax is paid and they are not related will not suffice. The final product ie Samsung Brand Air Conditioners' manufactured by the OEM vendors by using such Heat Exchangers, are purchased back by the appellant only. Such sale cannot be treated as sale in normal course of trade. I observe that during the investigation, the appellant submitted Costing data in respect of such Heat Exchangers duly certified by Chartered Accountant which proved that the "cost of production' was more than the value on which duty of....
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....price of the wholesale trade of the assessees. They specifically allege, which is not disputed by the assessees, that the 'loss making price' continuously for a period of more than five years while selling more than 29000 cars, cannot be the normal price. It is true that in notices issued the Revenue does not allege that the buyer is a related person, nor do they allege element of flow back directly from the buyer to the seller, hut certainly, they allege that the price was not the sole consideration and the circumstance that no prudent businessman would continuously suffer huge loss only to penetrate the market and compete with other manufacturer of more or less similar cars. A prudent businessman or woman and in the present case, a company is expected to act with discretion to seek reasonable income, preserve capital and, in general, avoid speculative investments. This court in the case of Union of India v. Hindalco Industries-2003 (153) ELT 481, has observed that, if there is anything to suggest to doubt the normal price of the wholesale trade, then recourse to clause (b) of sub-section (1) of Section 4 of the Act could be made------. 50. ----------------- In ot....
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.... comes into the play and is therefore chargeable on that part of the demand which is confirmed. Moreover the entire set of operations smacks of a design which is to keep the successive value of the products in check. First M/s Samsung clear the 'Heat Exchangers' to their OEMs which has to be priced in such a way that the manufactured Air-Conditioners would cost within reasonable limits. Then OEMs have to price the Air-Conditioners in a way so as to enable the Principal, who are purchasing such manufactured Air-Conditioners, to price them keeping in mind the market sensitivities. This therefore cannot be a simple operation and there is no way a comparison can be made because there is no third party sale of the "Heat Exchangers." 4.6 As regard the charge of suppression of facts. I find that during the course of visit by the officers of Anti-Evasion wing. Noida on 09/10.11.06. Shri Vimal Kumar Bajpai, DGIV (Excise) in his statement 10.11.06 informed that for discharging Central Excise duty, transaction value was taken more than 110% of the cost of production. During the course of enquiry it was noticed that sale to OEM vendors cannot be regarded as sale on principle t....
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.... a calculation sheet was also provided. 12.12.2006 Department sent letter requiring cost data certified by the cost accountant 28.03.2007 The Appellant based on computation of actual costing deposited the differential duty amounting to Rs. 78,68,944/-. The difference in cost was about 11%. Intimation was sent vide letter dated 03.05.2007 09.04.2007 Again the costing data certified by cost accountant sought 30.04.2007 The Appellant obtained the costing from the Chartered Accountant 15.05.2007 Intimated about the deposit of interest of Rs. 8,77,621/- 31.05.2007 Intimated about the deposit of differential duty of Rs. 42,42,813/- alongwith interest Rs. 1,18,048/- for Jan, 2007 to March, 2007. Intimated that for future, actual cost of previous period plus 10% will be adopted. 06.08.2007 Statement of Mr. Surendra Kumar Sharam, Vice-President was recorded 26.06.2008 Show cause notice was issued 31.01.2017 Impugned Order-in-Original passed 4.4 On perusal of the above table it is observed that appellant had paid differential duty of Rs.78,68,944/- + Rs.42,42,813/- along with interest of Rs.1,18,048/- for the entire period from 2005 to....
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....ting extra-commercial consideration, even when there was no additional consideration of money value flowing directly or indirectly from the buyer to the seller. For the period prior to the date of the judgment, in cases where a show cause notice has been issued on the grounds of the FIAT judgment alone, there may not be a case for invoking the extended period of limitation. In such cases, only the normal period of limitation will apply. 4.1 For the period after the date of the judgment, i.e. from 29-8-2012 onwards, if there is a sale in the circumstances similar to the case of M/s. FIAT and yet transaction value of goods is declared as the correct assessable value, then such declaration would amount to wilful mis-statement of the assessable value." 4.6 In the present case the period involved is prior to 29.08.2012 the date of judgment of the Hon'ble Apex Court and in accordance with the Board's circular, extended period of limitation could not have been invoked in the present case. If that is so the penalties under Section 11 AC could not have been imposed on the appellant. In view of the decision of Hon'ble Supreme Court in the case of M/s Rajasthan Spinning and Waivin....